After two years of investigations and negotiations over court logistics, next week, the Federal trial for the $24 billion Kroger-Albertsons supermarket merger begins. And this one’s really bitter, with new revelations emerging a few days ago from the Federal Trade Commission that a group of Albertsons executives, including CEO Vivek Sankaran, have been deleting text messages relevant to the trial that the court ordered them to preserve. That’s a big legal no-no. Meanwhile, Kroger launched a lawsuit against the FTC, seeking to have the commission deemed unconstitutional.
Kroger and Albertsons are both monsters, and the two of them combining would create the second largest chain in the country, after Walmart, with 15% of the national grocery business.
The merger is happening across the backdrop of consolidation in the industry. “There are already 30% fewer grocery stores than there were a few decades ago,” which impacts pricing, and large chains “not only secure better prices for goods than their smaller counterparts, but can also increase prices faster than costs, contributing to inflation.” This merger will worsen the situation, as “suppliers, consumers, and workers will all feel the pressure from Kroger/Albertsons, and since suppliers buy from farmers, farmers will feel it too, at least indirectly.”
If the deal goes through, then the rest of the industry, as Supermarket News notes, will follow. “The Kroger-Albertsons deal heralds a ‘new grocery landscape.’ If that deal goes through, other chains might merge
Still, so what? So supermarkets get bigger? Who cares? Well the answer is, according to the FTC, that prices will go up and wages will go down.
Kroger and Albertsons were found to be colluding on prices and wages during strikes, which is, you know, a crime. The FTC doesn’t have criminal jurisdiction, so that’s on the Antitrust Division. But it’s a scandal-ridden merger.
I am SHOCKED! Hopefully the antitrust division will get on the stick and make some criminal charges agin the JCs.
Eventually, the FTC demanded a court order, and the court decided that, yes, text messages were relevant to the merger, and so the merging parties had to hand over text messages. And yet, when the FTC asked for a detailed accounting of what messages had been lost, Albertsons didn’t even bother responding for four months.
Four days ago, the FTC and eight states claimed in a filing that, well, four out of eight executives for Albertsons didn’t preserve their text messages. We don’t know what those messages said, but it doesn’t seem accidental. The FTC wrote, “At least one thread - although stripped of its full context - still reveals one Albertsons executive’s assessment that the merger will likely increase prices.”
So what happens now? Well, the FTC requested what’s called an adverse inference, which means that the judge should assume the defense was naughty and either rule against them straight-up or strongly presume they are engaged in unlawful behavior. Basically, the party who didn’t get access to evidence that was destroyed gets to ask the judge to put her thumb on the scale on their behalf.